STEPHENS, Judge.
In this appeal, we consider whether Plaintiffs' malicious prosecution claims under North Carolina law brought in Guilford County Superior Court are barred by the doctrine of collateral estoppel as a result of the dismissal under Federal Rule of Civil Procedure 12(b)(6) of certain federal law claims brought in Plaintiffs' earlier federal lawsuit against Defendants. Because we conclude that dismissal of federal claims pursuant to Federal Rule 12(b)(6) is not an adjudication on the merits for purposes of collaterally estopping a plaintiff from raising the same issues under state law in our State's courts, we affirm the trial court's order denying Defendants' motion to dismiss on the basis of collateral estoppel.
This appeal arises from claims and counterclaims of racial discrimination, misconduct, and conspiracies by various factions in the Greensboro Police Department ("GPD") and the government of the City of Greensboro ("the City"). In simplified form, some African American GPD officers alleged that a secret unit of Caucasian GPD officers was
In June 2005, GPD Officer James Hinson and other African American GPD officers accused then-GPD Chief David Wray of using certain Caucasian officers of the Special Investigation Section ("SIS"), a subdivision of the GPD, to surveil and target African American GPD officers. Officially, the SIS was tasked with duties such as protecting celebrities who visited Greensboro, investigating allegations of criminal activities by GPD officers, and handling other sensitive police matters.
Hinson alleged that one tool the SIS used in its supposed racial misconduct against African American GPD officers was a binder containing photographs of African American GPD officers known as the "black book." The SIS did in fact have a black binder which contained photo arrays of African American GPD officers, but SIS officers asserted that the photos were only those officers who had been on duty at the time of an alleged sexual assault by a uniformed African American GPD officer and that the binder was shown only to the victim of the alleged sexual assault as part of an SIS investigation into the matter.
After learning of Hinson's claims, Defendant Mitchell Johnson, who was employed by the City first as Assistant City Manager and later as City Manager, and who also served on the City Council, met with attorneys representing some of the African American GPD officers who made the allegations against the SIS. After that meeting, Johnson instructed the City Attorney's Office to initiate an investigation of Plaintiffs William Thomas Fox and Scott Everett Sanders, two Caucasian GPD officers alleged to have been part of the SIS group racially targeting African American officers. Johnson and the City Council also contracted with Risk Management Associates, Inc., ("RMA") to conduct a private investigation of Plaintiffs and the SIS to supplement the official City investigation. Plaintiffs contend that the investigations were initiated by Johnson as part of a plan to pressure Wray into resigning as well as to tarnish Plaintiffs' own reputations and ultimately remove them from their positions with the SIS.
In the midst of the official and private investigations, on 9 January 2006, Wray resigned as GPD Chief, and Defendant Timothy R. Bellamy was appointed as acting Chief and then Chief of the GPD. A few days later, the Federal Bureau of Investigation ("FBI") began its own investigation into the actions of Wray and Plaintiffs. After learning that the FBI investigation revealed no evidence of civil rights violations by Wray, Fox, or Sanders, Bellamy directed Johnson to request an investigation by the State Bureau of Investigation ("SBI"). In the course of its investigation, the SBI interviewed numerous GPD officers, including defendants Gary R. Hastings and Martha T. Kelly. Plaintiffs contend that Bellamy and Johnson sought the SBI investigation despite knowing that the allegations of wrongdoing by Fox and Sanders were false. Plaintiffs further assert that Hastings and Kelly gave false information to the SBI and destroyed and/or refused to turn over to the SBI evidence and information that was favorable to Fox and Sanders. The SBI investigation concluded in the fall of 2007, and resulted in the indictment of Fox on one count each of felonious obstruction of justice and felonious conspiracy, while Sanders was indicted on one count of accessing a government computer without authorization, two counts of felonious obstruction of justice, and one count of felonious conspiracy.
Following a trial in February 2009, a jury found Sanders not guilty of improperly accessing a government computer. As a result of a post-trial Brady
Plaintiffs filed a complaint on 23 March 2010 against Johnson, Bellamy, Hastings, and Kelly, as well as the City, RMA, and GPD officers John Slone and Ernest Cuthbertson (collectively, "the federal defendants") in the United States District Court for the Middle District of North Carolina. See Fox v. City of Greensboro, 807 F.Supp.2d 476 (2011). In their complaint, Plaintiffs alleged claims for
Id. at 483-84. After the federal defendants moved to dismiss, Plaintiffs sought and were granted leave by the federal court to amend their complaint to "clarify and amplify the factual basis for their allegations." Id. at 501. Plaintiffs filed their amended complaint on 1 April 2011. The federal defendants then moved to dismiss the amended complaint, including, inter alia, Plaintiffs' claims "that the City, Johnson, Bellamy, Hastings, and Kelly took certain actions ... that led to `unfounded' criminal charges against Plaintiffs (which ultimately terminated in their favor) and the arrest and detention of Plaintiffs in violation of their Fourth Amendment right to be free from unreasonable searches and seizures." Id. at 491. Specifically as to those Fourth Amendment claims, "Defendants argue[d] that Plaintiffs' vague allegations d[id] not sufficiently indicate that each Defendant performed actions proximately causing Plaintiffs' indictment and arrest." Id.
The federal court dismissed with prejudice all of Plaintiffs' federal law claims, including the Fourth Amendment claims. Id. at 501. In addition, noting that, "[u]nder 28 U.S.C. § 1367(c), a federal district court may decline to exercise supplemental jurisdiction over such state-law claims if the district court has dismissed all claims over which it has original jurisdiction[,]" the federal court "decline[d] to exercise supplemental jurisdiction over [Plaintiffs'] state-law claims[,]" which it dismissed without prejudice. Id. at 500 (citation and internal quotation marks omitted).
On 23 January 2012, Plaintiffs filed a complaint ("the state complaint") in Forsyth County Superior Court
On 24 February 2012, the individual state defendants moved to dismiss all claims against them "because [the complaint] fails to sufficiently plead a conspiracy, abuse of process, and other matters." See N.C. Gen.Stat. § 1A-1, Rule 12(b)(6) (2013). The City also moved to dismiss. At the motion hearing, the state defendants argued that Plaintiffs'
Defendants appealed from the trial court's 14 August 2012 order, contending that the trial court erred by failing to dismiss Plaintiffs' malicious prosecution claims pursuant to Rule 12(b)(6). Plaintiffs cross-appealed from the trial court's dismissal of their civil conspiracy and abuse of process claims. In an unpublished opinion entered 17 December 2013, this Court dismissed the appeal and cross-appeal as interlocutory. Fox v. City of Greensboro, 752 S.E.2d 256 (2013), available at 2013 N.C.App. LEXIS 1321, disc. review denied, 367 N.C. 494, 757 S.E.2d 919 (2014). In its opinion, this Court noted that
Id. at *3, 2013 N.C.App. LEXIS 1321, at *6-7 (citations, internal quotation marks, and brackets omitted). This Court then held that Defendants
Following dismissal of the prior appeal, Defendants filed a timely answer to Plaintiffs' complaint on 14 November 2013, specifically pleading the factual basis for their collateral estoppel defense and attaching and incorporating by reference the relevant federal complaint and order upon which that defense is based. On 5 August 2014, Defendants moved for judgment on the pleadings pursuant to Rule 12(c) of our North Carolina Rules of Civil Procedure:
Following a hearing on 4 September 2014, the trial court denied Defendants' motion specifically as to the issue of collateral estoppel by order entered 25 September 2014. From that order, Defendants appeal.
As Defendants note, this appeal is interlocutory.
Turner v. Hammocks Beach Corp., 363 N.C. 555, 558, 681 S.E.2d 770, 773 (2009) (citations and internal quotation marks omitted). As noted supra, following dismissal of their previous appeal, Defendants filed an answer in which they specifically asserted collateral estoppel as a defense to Plaintiffs' malicious prosecution claims and moved for judgment on the pleadings based upon their collateral estoppel defense. Defendants having made "a colorable assertion that the claim is barred under the doctrine of collateral estoppel[,]" the denial of their motion for judgment on the pleadings affects a substantial right. See id. Accordingly, Defendants' interlocutory appeal is properly before this Court.
Defendants argue that the trial court erred in denying their motion for judgment on the pleadings as to Plaintiffs' malicious prosecution claims based on the doctrine of collateral estoppel. We disagree.
As a preliminary matter, we consider Defendants' assertion that the trial court's August 2012 order denying their Rule 12(b)(6) motion did not bar the trial court from adjudicating Defendants' motion for judgment on the pleadings pursuant to Rule
First, Defendants point out that a motion pursuant to Rule 12(c) may be made only after the pleadings are closed, while a Rule 12(b)(6) motion must be made before the pleadings are closed. See N.C. Gen.Stat. § 1A-1, Rule 12; see also Robertson v. Boyd, 88 N.C. App. 437, 440, 363 S.E.2d 672, 675 (1988) (noting that "[t]he principal difference between the two motions is that a motion under Rule 12(c) ... is properly made after the pleadings are closed while a motion under Rule 12(b)(6) must be made prior to or contemporaneously with the filing of the responsive pleading"). Plaintiffs counter that, because "[b]oth a motion for judgment on the pleadings and a motion to dismiss for failure to state a claim upon which relief should be granted when a complaint fails to allege facts sufficient to state a cause of action or pleads facts which deny the right to any relief[,]" id. (citations omitted), there is no "functional" difference between the stage of the proceedings when each motion is decided. We must reject Plaintiffs' contention:
Cash v. State Farm Mut. Auto. Ins. Co., 137 N.C. App. 192, 201-02, 528 S.E.2d 372, 378 (2000) (citations and internal quotation marks omitted).
Regarding the second and third Smithwick conditions, this Court's opinion dismissing Defendants' previous appeal shows that different materials and questions were considered by the trial court in ruling on the respective Rule 12(b)(6) and Rule 12(c) motions. In ruling on Defendants' Rule 12(b)(6) motion, the trial court considered only Plaintiffs' complaint and the arguments of the parties, while the later Rule 12(c) ruling was based upon the trial court's consideration of additional materials: Defendants' answer, the federal complaint, and the federal court's decision. Further, as we observed supra, this Court dismissed Defendants' interlocutory appeal precisely because it was not persuaded by Defendants' argument that the trial court's denial of their Rule 12(b)(6) motion "necessarily rejected their argument that Plaintiffs' malicious prosecution claims were barred by collateral estoppel." Fox, 2013 WL 6667041, at 2, 2013 N.C.App. LEXIS 1321, at *4. In contrast, the trial court's Rule 12(c) order explicitly ruled on Defendants' collateral estoppel argument. In sum, the Rule 12(c) order appealed from here is not an improper "overruling" by a second superior court judge of an earlier superior court judge's Rule 12(b)(6) order.
"A motion for judgment on the pleadings [pursuant to Rule 12(c)] should not
Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974) (citations omitted). We review de novo a trial court's ruling on a motion to dismiss under Rule 12(c). Id. Further, for a Rule 12(c) motion based upon an assertion of collateral estoppel:
Burgess v. First Union Nat'l Bank of N.C., 150 N.C. App. 67, 75, 563 S.E.2d 14, 20 (2002) (citation, internal quotation marks, brackets, and emphasis omitted).
Defendants' collateral estoppel defense is based on their contention that, in its 2011 opinion dismissing, inter alia, Plaintiffs' Fourth Amendment claims for failure to state a claim under Federal Rule 12(b)(6), the federal court ruled against Plaintiffs on the same issue of proximate cause applicable to their state malicious prosecution allegations, thereby precluding re-litigation of those claims in Guilford County Superior Court. Although we agree that both Plaintiffs' federal Fourth Amendment claims and their state malicious prosecution claims include the same element of proximate cause,
"Under the doctrine of collateral estoppel, when an issue has been fully litigated and decided, it cannot be contested again between the same parties, even if the first adjudication is conducted in federal court and the second in state court." McCallum v. N.C. Coop. Extension Serv. of N.C. State Univ., 142 N.C. App. 48, 52, 542 S.E.2d 227, 231 (citation omitted; emphasis added), appeal dismissed and disc. review denied, 353 N.C. 452, 548 S.E.2d 527 (2001). In addition, "parties are precluded from retrying fully litigated issues that were decided in any prior determination, even where the claims asserted are not the same." Id. at 51, 542 S.E.2d at 231 (citation omitted). "The elements of collateral estoppel ... are as follows: (1) a prior suit resulting in a final judgment on the merits; (2) identical issues involved; (3) the issue was actually litigated in the prior suit and necessary to the judgment; and (4) the issue was actually determined." Bluebird Corp. v. Aubin, 188 N.C. App. 671, 678, 657 S.E.2d 55, 61 (citation and internal quotation marks omitted; emphasis added), disc. review denied, 362 N.C. 679, 669 S.E.2d 741 (2008). Thus, as an initial step, we must determine whether the federal court's dismissal of Plaintiffs' claims under Federal Rule 12(b)(6) was a final judgment on the merits that actually decided the issue of proximate cause.
As the federal court noted in its order, "[t]he purpose of a motion under Federal Rule of Civil Procedure 12(b)(6) is to test[] the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Id. (citation and internal quotation marks omitted; emphasis added). In so doing, the federal court explicitly applied the so-called "plausibility" pleading standard as enunciated by the United States Supreme Court in Bell Atl. Corp. v. Twombly:
Id. at 484. As a prior panel of this Court has previously held, the higher federal plausibility pleading standard differs from our State's notice pleading standard:
Holleman v. Aiken, 193 N.C. App. 484, 490-91, 668 S.E.2d 579, 584-85 (2008) (citations, internal quotation marks, and brackets omitted).
Given the difference between the federal and State pleading standards, we must conclude that a federal court's dismissal of claims pursuant to Federal Rule 12(b)(6) is not an adjudication on the merits for purposes of collaterally estopping a plaintiff from raising the same or related claims under State law in our State's courts. See Hoots, 106 N.C.App. at 404, 417 S.E.2d at 274. In other words, a determination that Plaintiffs' allegations regarding proximate cause in their Fourth Amendment claims did not pass the federal plausibility test does not automatically mean they fail to meet the notice pleading requirements of our State. We acknowledge that the federal court's well-reasoned and highly detailed opinion amply demonstrates that the allegations in Plaintiffs' federal complaint regarding proximate cause between Defendants' alleged acts and Plaintiffs' criminal prosecutions were, "to put it charitably, sparse at best." Fox, 807 F.Supp.2d at 495. However, the "issue actually litigated in the prior suit ... and ... actually determined" by the federal court, see Bluebird Corp., 188 N.C.App. at 678, 657 S.E.2d at 61 (citation and internal quotation marks omitted), was whether Plaintiffs' pleadings met the plausibility standard applicable to motions to dismiss pursuant to Federal Rule 12(b)(6). The federal court's opinion simply did not consider or address the issue of whether Plaintiffs' pleadings sufficiently stated a claim to survive a motion to dismiss pursuant to the notice pleading requirements of North Carolina Rule 12(b)(6). Accordingly, the trial court properly denied Defendants' motion to dismiss pursuant to Rule 12(c) based upon their assertion of collateral estoppel.
We emphasize that our holding here is specific and limited to the sole issue raised by Defendants in this appeal: whether Plaintiffs are collaterally estopped from litigating their state malicious prosecution claims in North Carolina courts because the federal court dismissed their federal "malicious prosecution" claims for failing to meet the plausibility standard applicable to motions to dismiss pursuant to Federal Rule 12(b)(6). We express no opinion about whether Plaintiffs' malicious prosecution claims were sufficiently pled under North Carolina Rule 12(b)(6). As noted by this Court in Defendants' previous appeal, that interlocutory issue is not before us at this point. See, e.g., Turner, 363 N.C. at 558, 681 S.E.2d at 773.
In sum, Plaintiffs are not collaterally estopped from bringing their malicious prosecution claims under state law. Accordingly, the trial court did not err in denying Defendants' motion to dismiss on that basis, and its order is
AFFIRMED.
Judges McCULLOUGH and ZACHARY concur.